Stock Analysis

Insiders who placed huge bets on Evelo Biosciences, Inc. (NASDAQ:EVLO) earlier this year would be disappointed with the 39% drop

Source: Shutterstock

Insiders who bought US$575k worth of Evelo Biosciences, Inc.'s (NASDAQ:EVLO) stock at an average buy price of US$1.46 over the last year may be disappointed by the recent 39% decrease in the stock. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$124k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Evelo Biosciences

The Last 12 Months Of Insider Transactions At Evelo Biosciences

The Independent Chair of the Board Ara Darzi made the biggest insider purchase in the last 12 months. That single transaction was for US$500k worth of shares at a price of US$1.46 each. That means that an insider was happy to buy shares at above the current price of US$0.32. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Evelo Biosciences insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGS:EVLO Insider Trading Volume March 16th 2023

Evelo Biosciences is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. From what we can see in our data, insiders own only about US$165k worth of Evelo Biosciences shares. This level of insider ownership is notably low, and not very encouraging.

What Might The Insider Transactions At Evelo Biosciences Tell Us?

It doesn't really mean much that no insider has traded Evelo Biosciences shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Evelo Biosciences insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Evelo Biosciences. Our analysis shows 5 warning signs for Evelo Biosciences (2 shouldn't be ignored!) and we strongly recommend you look at them before investing.

But note: Evelo Biosciences may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Valuation is complex, but we're helping make it simple.

Find out whether Evelo Biosciences is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis